Posted by GINO on February 28, 1999 at 18:00:36:
I told quite a few of you about this technique before in chat so i figured i’d give you the breakdown of how i used it this month.
my seller wanted 165k
house is worth 165k
i offer 136,900 cash
he: laughs
i: offer 206,250 and he pays title and Appraisal NOW!
he says: sweet
heres how i did it…
the guy has equity and is heavily into investing (stocks bonds etc)d open to understanding the time value of money. i sense this and play on it.
i sign a 90 day option on the house…found my buyer with 10% down and decent credit, sold him the house for 165k with 16,500 for his down.
i write the note for 30 years (148,500) with a 5 year prepay penalty…@11%
i sell the first 5 years of payments with a face value of $85k to my investor for $62,000
now my seller does’nt want to deal with collecting payments or anything and all he needs right now is 70k.
so at closing he gets 62k and 8k of the down payment ( i get the other 8.5k)
the investor collects payments for the next 60 months and then it turns back over to my seller…the buyer still owes 145,000
i then sell the well seasoned balance immmediately back to the investor for 143,00(actually he pays 145k) and sweep myself another 2k.
so i got my seller:
the 62k
the 143k
the 8k
=$213,000
then i deduct my FEE for structuring the transaction of 7k
he gets his 206k for his 165k home…and the satisfaction of knowing he mad out like a bandit on this creampuff of a home he would’nt part with for a penny less than its worth.
i made $17,000 structuring the deal and had the seller run the ads to find the buyer. im into this deal for $0. my Yield and return on my money in incalculable. i get $8,500 up front and $9,000 in 5 years.
this deal was sweet so i wanted to share it with you. the key think here was educationg the seller as to how he could let his money that he did’nt need right away sit in the home. by sitting down with a pad and pen and explaining this to sellers it works quite well as long as they have eq and a head on their shoulders. its not a ton of money for me but if consider the fact that its really simple and takes only about 10 hrs of your time maybe more but i have my seller show the property, its not a bad little payday. its also nice to cathc the tail end of a deal like that and get a 9k check for something you pretty much forgot about.
GINO
ps: nothing illegal about this deal in AZ, check with your state RE laws 